Hillary Clinton is now officially running for president, and some are already predicting that Social Security will be a hot topic for 2016.
Elizabeth Warren reignited the Social Security debate when she introduced an amendment late March to the Senate budget resolution to not only ensure Social Security’s solvency, but also to expand benefits. Warren had previously introduced the idea of expansion last fall, but this time around, she has more backing—at least from her party. Nearly every Democrat supported the boost; every Republican opposed it. Mother Jones calls her move a “cool,” “tough-to-ignore 2016 issue.” Bloomberg View’s Megan McArdle wasn’t as impressed.
Interestingly, for all the talk about expansion, there hasn’t been any mention of extension to those without Social Security coverage. Currently, 6.5 million government workers hold positions that aren’t covered by Social Security. Within this pool, over a million teachers remain uncovered.
Ironically, extending coverage faces much of its opposition from the left, primarily from public sector unions. Here, unions take contradictory positions, fully embracing Social Security benefits for those who already have coverage, on the one hand, while adamantly opposing extending coverage to those without it.
Extending coverage may be less politically hip than expanding coverage, but it would improve retirement security for a significant pool of workers. The federal government has repeatedly considered extending coverage to all workers. In 1983, under the Reagan administration, Congress extended Social Security coverage to all newly hired federal workers, paving the way for the “3-legged stool” that almost all federal workers rely upon today. Recently, the bipartisan Simpson-Bowles commission recommended mandatory coverage, a move that by itself could reduce Social Security’s long-term shortfall by eight percent and extend the trust fund’s solvency by two years. Additional reports from the Social Security Administration and the Government Accountability Office have confirmed similar numbers. Extending coverage would also better distribute the burden of Social Security’s legacy costs, which comes from the first beneficiaries getting more in benefits than what they contributed.
Expansion may be a better political talking point than extension, but extending coverage to all workers would provide public sector workers with better benefits, while simultaneously distributing the legacy burden more evenly across all workers and improving Social Security’s long-term solvency. Because eventually, it’ll be time for each of us to retire.